Paying money in fraud settlement

Government fraud settlements are getting more personal. Which means the Yates memorandum is having its intended effect. Issued in 2015, the memo requires that government attorneys focus more on individual liability when resolving fraud investigations. For example, that year only 6 settlements imposed personal liability on physicians settling complaints filed under the False Claims Act. According to an analysis by Eric Topor of Bloomberg BNA (subscription required), the number of personal settlements paid by doctors has more than tripled. This year the number is up to 26; and the year is not over yet.

Personal settlements will continue. A recent post reports that Deputy Attorney General Rosenstein will review the policies created by the Yates memo when incorporating it into the United States Attorney’s Manual. Rosenstein indicated, however, that he intends to keep up pressure on individuals.

The Department of Justice is not alone in seeking more personal settlements. Topor’s article shows that qui tam relators agree individuals should pay more even if it means longer negotiations before settlement.

The analysis also reveals that settlements contain twice as many cooperation clauses since 2008. These clauses require individuals and entities to cooperate with ongoing fraud investigations.  This increase is not necessarily ominous. The Yates memo encourages government attorneys to keep open the option of additional settlements. A cooperation clause provides that flexibility without guaranteeing that an additional false claims settlement will occur. Unfortunately, those seeking closure will be disappointed. That flexibility means that the investigation may seem never-ending.

Torpor’s analysis suggests personal settlements are less likely when employees work in areas outside billing. True as far as that insight goes, an employee remains liable when the employee participates in fraudulent practices. If the investigation reveals an employee’s involvement, the government is much more likely to demand a personal settlement.